Best Buy cuts earnings forecast

Best Buy Co. rattled investors Wednesday, warning that an already grim holiday shopping season that’s expected to be the worst in decades might be getting worse.

Days after its rival Circuit City Stores Inc. filed for bankruptcy protection, the nation’s largest consumer electronics chain dramatically cut its fiscal 2009 earnings outlook and said it was being hammered by the worst retail environment the 42-year-old company had yet to endure.

“Rapid, seismic changes in consumer behavior have created the most difficult climate we’ve ever seen,” Chief Executive Brad Anderson said in a statement. “Best Buy simply can’t adjust fast enough to maintain our earnings momentum for this year.”

But Best Buy’s misfortunes may spell opportunity for deal-seeking shoppers, especially during the traditional Black Friday shopping extravaganza on the day after Thanksgiving.

Morningstar analyst Brady Lemos said he expected Best Buy to offer deep discounts on products to try to drive sales and keep customers coming into stores.

“It’s big news for consumers,” he said. “I think they’ll want to sell as much as possible.”

The Richfield, Minn., chain said it now expected earnings of $2.30 to $2.90 a share for the fiscal year ending in February, down from a prior estimate of $3.25 to $3.40.

The retailer forecast revenue of $43.7 billion to $45.4 billion, as well as a 1% decline in same-store sales, or sales at stores open at least 14 months, as shoppers scale back on spending because of a tight credit market.

Analysts had expected earnings of $3.02 a share and sales of $46.2 billion for fiscal 2009, according to a Thomson Reuters survey. Analysts said Wednesday that they didn’t foresee the magnitude of the guidance cut that was announced.

Best Buy is scheduled to post fiscal third-quarter results Dec. 16.

Its shares dropped $1.91, or 8%, to $21.97.